Gas and Oil Price Speculation Surges on Kalshi as Iran Closes Strait of Hormuz
PIxabay/eyeonic images
Iran’s closure of the Strait of Hormuz has caused global oil prices to spike, but speculators on Kalshi seem unsure of the likely severity of the crisis and how long it will last. Markets pertaining to the Strait and to oil and gas prices have been some of the most heavily traded on the site outside of the sports and crypto verticals that make up the bulk of Kalshi’s business.
CFTC regulations prohibit event contracts on war and death. However, contracts closely connected with the war have been extremely popular since President Trump began to tease the possibility of a strike. Initially, contracts on the removal of Ayatollah Khamenei as Supreme Leader received the most volume. Following his death and the resolution of that market, activity switched to predictions on his replacement and whether Iran would successfully close the Strait of Hormuz for a week or more.
That latter market resolved to Yes early this morning. As it became increasingly clear that would be the case, market volume shifted yet again, this time to the closure’s impact, in the form of global crude oil prices.
Saudi Arabia’s state oil company, Aramco, has warned that it will be “catastrophic” if the Strait remains closed.
For oil prices, Kalshi’s chosen metric is the West Texas Intermediate (WTI) spot price on the New York Mercantile Exchange. Over the weekend, daily trading volume on TWI spiked to nearly $1 million, almost four times the previous high.
By contrast, speculation on domestic gas prices has always been comparatively popular. Those markets have also seen heavier volume recently, but not to the same extent.
Cycles and Recent Trends in Oil & Gas Price Speculation
Markets on U.S. average gas prices — as measured by the American Automobile Association — follow a strong weekly cycle. That’s because it’s the weekly markets that are most popular, and the bulk of the action takes place on Sundays, close to the deadline. Kalshi offers the markets in five-cent increments, and the closer to a threshold value the final price looks to be, the more intense the trading.
Gas Prices
Until the attack on Iran, gas prices were dropping. Warm weather in February was expected to mitigate demand, and made Feb 15 the single biggest trading day of the year for gas price contracts on Kalshi.
Although Sunday peaks since the attack have not beaten that record, the floor is now higher. In January and February, daily volumes typically only exceeded $200,000 between Friday and Sunday. Since the start of U.S. action in Iran, there has only been one day below that threshold.
Hormuz Strait Closure
By contrast, trading on the closure of the Hormuz Strait has been available since January 8, yet participation was almost non-existent until the war began. Total volume up to and including Feburary 27 amounted to just $337,770, a number beaten by every single daily volume figure since then. On March 6 alone, over $1 million in trading happened on the Strait’s closure, during which time the price rose to more than 85%, creeping slowly higher from there until the market settled.
Oil Prices
Contracts on the WTI spot price see a similar weekly cycle to gas prices, but much lower volume. Sunday peaks are often in the low six figures, and very little trading happens the rest of the week.
However, after March 6, the Strait of Hormuz market was all but decided, and many speculators lost interest, moving to WTI instead. Over half a million in trading happened over the weekend, and yesterday’s volume was just shy of $1 million — unheard-of for a Monday.
Markets Predict a Temporary Lull, But More Crises to Come
Like the stock market, prediction markets don’t seem entirely sure how seriously to take President Trump’s claims that the war will be short-lived.
After tumbling late last week, the Dow Jones and other major indices have rebounded since Trump’s assurances early Monday. Similarly, Kalshi predictions for the price of gas at the end of March have begun to come down.
The consensus value for the national average on March 31 peaked at around $4.50 on March 8. It has since come down to around $3.70. That’s almost exactly where it was early on March 6, before the rapid movement in the Strait-closure market and corresponding rise in oil and gas price markets.
And yet, alternative markets on the annual high-water mark for gas prices have continued to rise. These are state-level, not national, and see lower trading volume. And yet, across the board, they are at an all-time high and still rising.
Texas, for instance, is the most popular of these markets. Up until the attack on Iran, the consensus price was a steady $2.80, indicating a belief that prices would continue to fall. Following the attack, it jumped to $3.10, and then to $3.40 during the heavy trading on March 6. This morning, it nearly hit $4.00, though there has been an intraday dip since then.
Comparing that trend to the end-of-March forecast suggests that traders believe the immediate crisis will abate in the short term, but there is at least one more to come.
Players trust our reporting due to our commitment to unbiased and professional evaluations of the iGaming sector. We track hundreds of platforms and industry updates daily to ensure our news feed and leaderboards reflect the most recent market shifts. With nearly two decades of experience within iGaming, our team provides a wealth of expert knowledge. This long-standing expertise enables us to deliver thorough, reliable news and guidance to our readers.
Latest News
